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Accenture Energy IT Trends

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Accenture’s Top 10 Technology Trendsin EnergyIT innovations that can help drive high performancein the oil and gas industry

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Upstream and downstream energy companiesface the likelihood of significant changes overthe next 20 to 30 years. There will be greaterdemand for more and different types of energysources from consumers and governmentsalike. As renewables and alternative transportfuels come on line, oil and gas companieswill face higher capital costs to transformoperations to meet the new energy mix,causing a corresponding shift in industryoperating models and ongoing investmentsin new computing technologies.Information technology (IT) will Accenture believes 10 technology In a recent Accenture survey, wecontinue to benefit oil and gas trends have significant potential to found that less than 25 percent ofcompanies in supporting the transition support energy companies in their energy IT executives, managers andto a new energy era. Companies are evolution to a new energy era. These staff believe their companies havemore readily investing in accelerating are trends we see developing in our embraced many of these trends andthe use of computing innovations everyday work and research, and innovations, such as service-orientedbeyond the early adopters, as they in working with strategic business architecture (SOA), cloud computingclearly see the business benefits partners such as Microsoft and Oracle and shared services, yet these are theof doing so. The key going forward Corporation, as well as key industry technology innovations that will driveis to filter through technology providers such as Honeywell, OSIsoft high performance.1developments and target the ones that and others.will deliver the greatest value to the This paper outlines our high-level vieworganization. of technology’s future in the energy industry, as well as how we see some energy companies harnessing these trends already.2

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The critical question for the energy executive:Which of the top 10 trends represent the bestopportunities for your company to leveragetechnology for increased competitive advantage?1.Greater consolidation of applicationsAcross the energy industry, companies According to Accenture Companies are also now deployingare eliminating redundant software experience, many of the energy vertical and horizontal enterpriseand using fewer applications to do applications to replace nonintegrated supermajors have undertakenmore. Overall, application portfolios custom software, improve visibilityof companies have typically grown initiatives to reduce their and standardize process control onhaphazardly, making them redundant number of applications— a global basis. For example, we havein functionality, cost and support in some cases by as much as seen one oil and gas company reducerequirements. Individual operating 50 to 70 percent. its number of applications from moreunits often run their own IT-supported than 6,000 down to 2,000 over abusiness processes in isolation, which six-year period. The benefits mostcan diminish opportunities to collaborate often cited from this type of greaterfor better economies of scale and consolidation of applications includeindustry leading practices. As a result, easier access to more accurateenergy companies cite issues of having information and enhanced collaboration,difficulty in capturing and archiving which leads to the next trend.data, being unable to find datatrapped in individual repositories, orhaving too much redundant and/orunnecessary data available.24

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2.Greater industry collaborationIn the past, IT organizations tried to Such collaboration comes in many As industry professionals collaborateachieve integration by modifying their forms, including: more, they are more motivated toexisting applications and adding more • Creation of simple, web-based integrate operating principles, standardsfunctionality. Today, however, there workflows or applications that allow and information management moreare smaller, more specialized tools users to manipulate or manage tightly, both within the enterprise andavailable in the marketplace with open data better than with manual filing among various industry players.interfaces that companies can use or e-mail. For example, the fieldto integrate with other systems and workforce can use a mobile data entry Oil and gas professionals areincrease collaboration, both across screen to enter instrument readings, working together more thanthe enterprise and outside the four which are then automatically uploaded ever, with 34 percent reportingwalls of the organization with other into a centralized system. that they are collaborating moremarket stakeholders. According to the • Implementation of electronic forms with other stakeholders in 2010Accenture and Microsoft Oil and GasCollaboration Survey 2011, oil and gas to standardize and/or automate data than in 2009.3professionals are working together collection and processing.more than ever, with 34 percent In fact, more than one third of thereporting that they are collaborating respondents who participated inmore with other stakeholders in 2010 the Accenture and Microsoft Oil andthan in 2009.3 Gas Collaboration Survey 2011 cited industrywide collaboration among key players as most likely to bring about needed improvements.4 5

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3.Better business intelligenceIT energy executives often cite the Companies are increasingly integrating In addition, successful BI solutions areproblem of how information is isolated BI more directly into business processes those that keep the business user inwithin individual business units, in and decision making to shift from mind, go for the ”low-hanging fruit”databases and with process owners, simply measuring “what happened” and move companies forward in smallcausing their companies to have multiple (historical data) to making more steps, rather than trying to solve allversions of the “truth” about their accurate forecasts of what will happen. problems at once. For example, Easternoperations. To address this problem, European oil and gas company MOLenergy companies have turned to Adopting BI, however, has been more started its BI initiative with operationsbusiness intelligence (BI) solutions to difficult than many IT and business reporting at just one refinery.6 Overenable better decision making. professionals had expected, even time, the company centralized more though it has been at the top of the sites and data sources to create aBusiness intelligence ranked CIO agenda. A move to more open single reference for different types ofnumber five on the list of the systems and simpler data structures, data—such as shop floor, supply chain, in which business users can use finance, and health and safety.top 10 technology priorities for self-service tools to consolidate andchief information officers (CIOs) analyze data, will help improve BI’sin 2011, according to Gartners adoptability and success.annual global CIO surveypublished January 2011.5 7

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4.Rise of the private cloudAs computing has become more of A recent Accenture industry study We estimate energy ITa commodity, energy companies are reveals that CIOs are finding real cost organizations could save upstriving to simplify their hardware savings from cloud computing, and we to 50 percent in hosting costsand software into more common estimate energy IT organizations couldenvironments. Standardization has save up to 50 percent in hosting costs annually with cloud computing.7gone the way of cloud computing as annually with cloud computing.7companies virtualize hardware (servers),software (software-as-a-service) and In addition to reaping these significantprocessing power outside the four walls savings, many major energy companiesof their organizations into dedicated are moving to cloud computing toenvironments (private clouds). increase asset utilization, go “green” and free up internal resources. For example,Private clouds are already a known ExxonMobil Upstream is building aquantity and a proven approach at new cloud-based infrastructure servicesome energy companies. Rapidly with IceWeb to deliver geo-imageryincreasing amounts of data and a to land exploration workers wherevergrowing requirement for real-time they are.8access to that data, however, areaccelerating this shift.8

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5.Rise of the public cloudVirtualization has grown even more in The savings from eliminating the cost Smaller energy companies, especially,the public domain to support back- of hardware, software, maintenance have discovered the benefits of SaaSoffice and other critical but noncore and IT labor, along with the benefits for web-based and vendor-hostedfunctions, in standardized applications of replacing a capital expense with solutions, for functions ranging fromhosted and offered to entire industries. a pay-as-you-go utility, make public maintenance management, to HRPublic clouds extend a company’s clouds even more appealing. For management, to collaboration anddata center capabilities by enabling example, Google offers its e-mail file exchange in capital expenditurethe provision of IT services from service at only $50 per user per year. projects. Some energy companiesthird-party providers over a network. Contrast this with the costs of running also deploy SaaS for front-officeMany companies are using software- internal mail systems, which can applications, such as Salesforce.com,as-a-service (SaaS) to replace legacy typically be $250 per user per year.9 to help assimilate acquired companiessoftware, while others are using it to and consolidate operations acrossdeploy new software in support of business units.business processes that previouslywere not very software driven. 9

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6.More shared service organizationsIndividual plants sometimes struggle While a more distributed environment Often, moving to a shared serviceto find sufficient resources and skills characterizes the global nature of model can mean full outsourcing.to support their IT operations full time. the energy business, companies For example, Talisman Energy choseWith separate IT shops, CIOs lose the that consolidate computing power to outsource back-office financeopportunity to leverage economies of and resources can also achieve operations by transferring selectscale and leading practices. more control over exactly how they finance and accounting processes will source specific services—e.g., to Accenture’s delivery center inA shared service organization internal SSO, partnered SSO and Bangalore, India. The entire transition(SSO) offers a one-to-many outsourcing. For example, we have was completed within five weeks,model to help centralize seen one energy company develop its and the partnership has deliveredoperations, standardize IT support organization as a stand- numerous innovations via more than alone business, turning “users” into 60 key performance indicators.11computing, control costs and “customers.” This new model employsdeliver more reliable, consistent specialized managers to interfaceservice to all users. between IT and the business owners and own the responsibility for all IT delivery and support.10

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7.Increased wireless networkingThe growth and ubiquity of safe, fast For example, until recently, technology Marathon Oil is using a wireless-and reliable wireless communications has limited the industry’s ability enabled gas detection system thatcan now provide access to data in to prepare for and respond to helps protect workers in potentiallyany part of the plant. Operators emergencies. However, with the hazardous environments. The solutioncan interact in real time through all advent of new wireless systems, combines WiFi and location-basedmanners of mobile devices—from made possible by the integration of technologies with gas detectors to“traditional” notebooks, to tablets, existing standard technologies, oil allow companies to remotely monitorto smart phones—to exchange voice, and gas companies are improving incidents in locations previously notvideo, photos and data without the safety. Location-based technology can suited for wireless networks.12need to install expensive networking now determine the whereabouts ofinfrastructure. employees, while also collecting data on gas levels from multiple sources toMore specifically, wireless technology raise alarms or to alert nearby workersadds business value by improving of any incidents.process quality, BI and regulatorycompliance. Wireless sensors feedcontinuous data on business processesto BI specialists who can analyze andreport on the data back to internal andexternal stakeholders—all in real time.Such capabilities help a companymanage cost, risk and performance. 11

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8.Increased use of service-oriented architectureWhile service-oriented architecture Most energy companies have already While SOA can reduce overall(SOA) has been on the CIO agenda established SOA as the standard for costs, the less obvious butfor several years, the technology has interfaces, though there are exceptions equally important benefit mayreally materialized in the past three in which SOA is not appropriate—years, as most software vendors have such as for real-time communication be the flexibility SOA can delivernow adopted it as standard, even for from distributed control systems by helping the business tovertical applications in the energy (DCS) or supervisory control and become more nimble.industry. SOA replaces the typical data acquisition (SCADA) systems.client-server architecture with multiple SOA is most appropriate where itlevels of functionality that include makes sense for business managersfoundational applications, such as to design and alter a software-drivenenterprise resource planning (ERP), a business process without specializedweb services repository and a business software programming skills. In suchprocess management system (BPMS). cases, the system links business users’ requests with the right applications and relevant functionality/systems, from which point web services do the rest. This method increases the ability of IT organizations to keep up with changing business demands.12

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9.More integrated operationsThe term “integrated operations” Perhaps most important, integrated With integrated operations,refers to mixing onshore and offshore operations enable energy companies companies can reduceoperational processing centers to to move personnel further away operational and capital assetstandardize and automate critical from potentially unsafe operatingbusiness functions. With the growth environments in the field. costs; accelerate productionin speed and bandwidth of network with 24/7 delivery; improvecomputing, IT professionals can One survey of upstream oil and gas leading practices throughmore seamlessly collaborate by professionals showed 44 percent of greater collaboration; increasedeploying uniform platforms, systems respondents felt “the upstream data data access; spread operationaland procedures across the world in explosion has had a negative effect on their ability to get their work done,” risk across the organization;global delivery centers. As a result, compounded by “the difficulty and and move personnel furthercompanies can reduce operationaland capital asset costs; accelerate time-consuming search of diverse away from potentially unsafeproduction with 24/7 delivery; systems to find information.”13 As operating environments inimprove leading practices through a result, we have seen many oil the field.greater collaboration; increase data companies adopt integrated operationsaccess; and spread operational risk under different programs usingacross the organization—all of which advanced technologies and real-timeextend the life of oilfield operations. data to drive organizational change. 13

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10.Better IT security for industrial control systemsNew levels of interconnectedness Today, these systems are linked Advanced threats have accelerated thehave made industrial IT, especially to public networks, including the industry’s trend to reevaluate securitydistributed control systems (DCS), Internet. As a result, companies face procedures and infrastructure, whichmuch more open and vulnerable more advanced threats from national can include a wide range of safetythan in the past. DCS and SCADA or international attackers who seek to measures, such as restrictions ofsystems are no longer fully isolated damage, control or monitor industrial physical access, intrusion detectionfrom outside networks, systems and systems. According to a Data Breach software, more sophisticated networkusers. As a result, energy companies Investigations report from Verizon segmentation with firewalls andmust work harder to find and deploy Business and the U.S. Secret Service, sourcing security to external providers.expensive and scarce resources to the relative proportion of critical To be more proactive, securitysecure their data and legacy process infrastructure breaches that come organizations must be able to activelycontrol systems, which were originally from outsiders has more than doubled visualize protocols, applications, contentconceived in a non-networked in the past decade.14 Moreover, older and users over all ports, in real time, toenvironment. DCS or SCADA systems often lack even gain the situational awareness required basic security and safety features. For to see and stop advanced threats example, simple physical access to a before they get inside the network. terminal or network cable can provide user access to the entire system in some cases.14